Mecklai Financial Report: November 28, 2011

The local unit opened lower at 61.93 versus previous close of 61.87 yesterday. It is likely to trade raoungbound between 61.60 ? 62.10 today ahead of the domestic GDP and the fiscal deficit numbers.

Updated: Nov 28, 2014, 05.06 PM IST

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DXY Index

Currency

Trend

Exp. Range

Support

Spot

Support

Weekly

Fortnightly

S3

S2

S1

R1

R2

R3

DXY Index

Up

Up

87.14-88.56

87.14

87.28

87.5

88.18

88

88.24

88.56

US Dollar index bounced from the lows of 87.68 and closed near the day?s high at 88.00 levels in a thin trading session as US was closed on the back of Thanks Giving Day.

No data was released in US but Dollar index crossed the psychological level of 88.00 on the back of tumbling Euro. Euro could not sustain above the level of 1.2500 levels and as a result it fell down till 1.2455 levels.

Oil prices plunge after OPEC meet, as they have decided not to cut output. They further reiterated that they will produce 30 million barrels a day for the next 6 months, and will watch to see how the market behaves. The WTI falls to $68.57 levels and Brent falls to $72.32 levels.

No data is set to release today in US which will enable the dollar index to take cues from European markets.

DXY: The index crossed the psychological level of 88.00 levels and can now move back till 88.24 level which is the first technical resistance followed by 88.56 levels. The bias remains positive as medium term and long term trend remains positive. A move above the level of 88.44 will further open positive possibilities for this index.

USDINR

Currency

Trend

Exp. Range

Support

Spot

Support

Weekly

Fortnightly

S3

S2

S1

R1

R2

R3

USDINR

Neutral

Neutral

61.40-62.25

61.4

61.5

61.65

62.04

61.95

62.1

62.25

The local unit opened lower at 61.93 versus previous close of 61.87 yesterday. It is likely to trade raoungbound between 61.60 ? 62.10 today ahead of the domestic GDP and the fiscal deficit numbers. DXY trades lower at 87.93 as markets remianed listeless ahead of a Thanksgiving long weekend. Sensex and Nifty have opened higher in early trade, with Sensex up 51 points up.

Finance Minister Arun Jaitley is likely to put some pressure on RBI to cut rates on Monday. GDP numbers are also expected to slow which could put some pressure on Rajan to initiate atleast a minimal cut. The cut could help to boost industry at a time when inflation has fallen to a multi year low. With Brent prices cooling further this seems a good time as any to initiate a lower cycle. However RBI has already signaled that it would like to keep rates harder by initiating open market operations of Rs 12,000 crore on December 1. They see the inflation coming down more as an outcome of base effect rather than any structural changes. It seems unlikely that they would give into the pressure though there is a distinct possibility that the guidance will be dovish

Meanwhile Moody?s indicates that the September quarter domestic GDP should come in 5.3%, a tad higher then the 4.8% reading a year earlier but lower than the reading of the first quarter of this fiscal at 5.7%. Moody?s has cited they remain positive about the momentum and expect the services sector to continue to expand adding to the progress. They also see the downside risks being lower on account of a better position on the fiscal deficit and the shoring up of external reserves. The Reuters survey indicates the number is likely to come in at about 5.1%.

The Dollar held its ground, moving up slightly on a day of lower liquidity on account of the Thanksgiving Holidays in the US. The action was in the Eurozone, as Draghi says that the ECB is open to a wide variety of assets for further stimulus, talking down the Euro again to below 1.25. German unemployment numbers came in stronger though inflation remained at zero. Japanese numbers reveal the struggle, as household spending (4.0 vs -5.6%) and inflation (2.4 vs 2.5%) dips. Unemployment, retail sales and industrial production were also lower indicating that it is likely to be a long hard road for Japanese reforms and stimulus to make an impact.

Technically speaking, USDINR opened at 61.93 levels and is been trading in a thin range of 61.87-61.93 levels in the early morning session. The support of 61.70 is still intact which opens positive possibilities for this p[air as it can move up near till 62.10 levels for today. The overall trend looks positive and the level of 62.30-62.40 can been seen in near term. Momentum indicators continue to show positive sign.

EURUSD

Currency

Trend

Exp. Range

Support

Spot

Support

Weekly

Fortnightly

S3

S2

S1

R1

R2

R3

EURUSD

Down

Down

1.2300-1.2500

1.23

1.2342

1.2367

1.2435

1.245

1.2466

1.25

The single failed to cross the level of 1.2599 levels and as a result it reverses thus giving a false break. The recent releases from Euro zone was on softer note which dragged the currency down against USD. The single currency made a low of 1.2455 after marking a high of 1.2523 levels.

On economic releases, German Prelim CPI marked at 0.0% against -0.3% earlier. The inflation is slowing down which is not a healthy sign for the economy. ECB has also shown concerns over it. CPI is a change in the price of goods and services purchased by consumers.

Spain which is the fourth largest economy of Euro zone cam out with low inflation marking at -0.4% against -0.1% earlier, suggesting s that deflation is taking hold in Spain.

German Unemployment change marked at -14k against -23k earlier. With German employment improving slightly there was no surge in single currency.

ECB president Mario Draghi reiterated that ECB is open to buying a wide variety of assets for further stimulus as German and Spain inflation data highlighted the struggle to revive the economy

European Bourses closed on positive note as CAC40 closed at 0.20% closing at 4382 levels and DAX was up by 0.59% ending at 9974 levels.

EUR/USD: The single currency gave a whipsaw as expected and moved below the level of 1.2500 levels slipping till 1.2447 levels. The pair is now expected to move in a range of 1.2367-1.2500 levels. Also the resistance of the downward sloping upper trend line from 1.3411 levels to 1.2887 levels is still intact which clearly indicates that the trend is still negative.

GBPUSD

Currency

Trend

Exp. Range

Support

Spot

Support

Weekly

Fortnightly

S3

S2

S1

R1

R2

R3

GBPUSD

Down

Down

1.5628-1.5800

1.5628

1.5666

1.5687

1.5685

1.575

1.5728

1.58

Cable after crossing the mark of 1.5785 levels made a high of 1.5825 but could not hold the line of 1.5800 levels thus falling till 1.5716 levels yesterday against USD.

Dollar index soared till 88.00 levels against basket of currencies which added pressure on Pound thus making it touch near 1.5700 levels.

GFK consumer confidence marked at -2 against -2 earlier. Consumer Confidence Index has stayed at the same level this month. Two of the five measures used to calculate the Index Score saw decreases this month, two of the five measures stayed at the same level and the remaining measure saw an increase.

FTSE 100 was down by 0.09% down by 5.75 points closing at 6723 levels despite of positive global cues.

Only a single piece of economic data is set to release in UK which is Nationwide HPI m/m.

GBP/USD: The pair gave a false break but could not cross the important level of 1.5840 levels and as such it reversed marking a low of 1.5716 levels. Now the pair will move in a range of 1.5575-1.5785 levels in coming days. The overall trend looks to be negative and can test the lower levels very soon.

Other Markets

India?s 10-year G-Sec -. The ten-year benchmark was up to 8.15% as news that the Finance Minister was likely to meet the RBI with the intention to work together towards a rate cut, spurred a rally. Foreign banks were sellers while the private and public sector banks were buyers. The RBI released its calendar of term repo auctions under the LAF increasing the amount of the first tranche on Nov 28 to Rs 18,000 crore instead of the usual Rs 15,000 crore. It also completed the underwriting of the G- secs to the tune of Rs 14,000 crore which it will auction this Friday.

US Treasury Market- The 10 year benchmark fell to 2.21% on a day marked by listless trading and low volumes on account of a Thanksgiving Holiday in the US. Trading will remain range bound on the long weekend holiday.

Crude Oil-: Saudia Arabia voted against production cuts at a keenly watched OPEC meeting this month, as smaller players of 12 member cartel were left to deal with sliding global prices. Prices slid further at the end of the meeting with WTI crude dropping to $68.87 and Brent falling to $72. 15. The outlook for prices looks very weak with prices expected of WTI Crude expected to touch $60 in the near term which could drive out unconventional sources such as shale and oil, from the market.

Gold-.Gold dipped slightly to $1186 dipping with oil and industrial metals which fell after the OPEC meeting ended without the anticipated production cuts at a time of burgeoning supply. However they are supported at these levels on account of the referendum on Switzerland on increasing gold reserves of the central bank from the current 8% to nearly 20%. Exit polls indicate that it is likely to be a ?No? vote which could send prices crashing down to $1146. However a Yes vote on the Swiss referendum could negate this reading with resistance at $1227.

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